Sourcing Bots: What, why and how.

Sourcing Bots: What, why and how.

Procurement in 2019 has hardly evolved in almost twenty years. Sourcing teams still face the same difficulties that they did since the turn of the millenium:

slow sourcing processes,

large amounts of time consuming manual work,

error-prone data management,

lack of oversight and analytical tools.

Sourcing Optimization took steps to alleviate some of these issues by speeding up the analytical process and providing tools to help identify the most cost-effective suppliers. Sourcing Automation goes one step further, in that it aims to eliminate repetitive manual work. This is possible since best practice in Strategic Sourcing is predictable: any process follows a pattern that depends on important key features. And even though execution itself might be complex, it is not so complex that it defies intelligent automation.

At the heart of Sourcing Automation is the “Sourcing Bot”. These are intelligent, pieces of software that sit on top of the Sourcing Optimizer infrastructure and are customized to suit the individual organisation’s procurement process. The typical Sourcing Bot is integrated with other third-party systems and uses Machine Learning and Natural Language Processing to learn from past sourcing events. It reacts to certain changes or parameters and automatically initiates and executes either parts of the procurement process or an entire flow. For example, a Sourcing Bot for a commodity might monitor commodity prices and stock levels, and then automatically initiate an eAuction to source a given commodity when i) prices are low and ii) stock levels fall below a certain threshold. The bot will know which bidders to invite and what type of auction to launch (for example Dutch vs English auction) based on past experience. Any new auction that it executes, will be automatically added to its training dataset, allowing it to continuously learn and evolve.

The benefits of Sourcing Bots are immediately obvious:

Time savings, allowing the procurement team to focus on strategic decision making